With concrete blocks stacked on the left lot, and a near-finished house on the right, Jim Toto opens the door of the canal-front, Gulf-access home for a tour.
There’s the owner’s suite split apart from two other bedrooms, with the gourmet kitchen, den and living room in between. There’s a pool being finished behind the house, and a view of the Sunfish Canal, which feeds just to the north into the Gator Slough Canal.
There’s a two-car garage, a walk-in pantry and a laundry room full of storage cabinets, the better to appease transplanted Northerners who no longer will have their typical attic and basement storage space.
Toto, owner of Toto Custom Homes, bought five adjacent lots earlier this year and went right to work, trying to satisfy a seemingly unquenchable thirst to build, build and build some more across Southwest Florida … despite interest rates that keep climbing and costs that are doing the same.
Though trending downward, inflation persists for numerous reasons, including challenges to finding labor and supplies.
The trend of new construction in the region, despite its difficulties, only will intensify as newcomers continue flocking to the area, and investors continue securing properties to rebuild along the coastal areas that were devastated by Hurricane Ian on Sept. 28, 2022.
As Gulfshore Business explores different facets of construction and development across the region, Toto shows one corridor that keeps filling in with new construction of single-family homes.
Northwest Cape Coral
The northwest portion of Cape Coral, off Burnt Store Road, continues to fill with new homes similar to the ones Toto has been building.
“First and foremost, I think it’s because the prices of property, not too long ago, were very affordable,” Toto says. “Because it was underdeveloped as opposed to the southwest. And I think people are now seeing the growth in northwest Cape Coral that’s making it even more attractive.”
More shopping centers are starting to take shape along the corridor, he said. Toto’s own new office building is at 2612 Santa Barbara Blvd., a corridor full of retail and office space—that’s a type of environment that has yet to take off along Burnt Store Road.
Toto recently forged a business alliance with Ed Stratton of Stratton Mortgage for financing. Toto Custom Homes now functions as a one-stop shop for home buying, with Toni Ann Toto assisting customers as a Realtor, Jim Toto, her husband, serving as the home builder and Stratton working for the buyer on financing.
“Your office space—such as doctors, attorneys, dentists, child care, stuff like that—is coming,” Toto says of northwest Cape Coral. “That tells me that the residential growth was outpacing the commercial. They didn’t have the amenities here like they do in the southwest, like Del Prado and Santa Barbara Boulevard.”
Before the COVID-19 pandemic, lots in this region were selling for $60,000 to $80,000. Now, they are going for $225,000 to $500,000, depending on the location and whether they come with a seawall.
Toto said he still kicks himself for not buying more waterfront land to develop before the pandemic. He lives in northwest Cape Coral, works there, invests there. His company is building 17 homes this year. He would like to boost that number up to 40, but he doesn’t want to get too big, either.
“My name is on the company,” Toto says. “My name is there, because I care. I want to oversee my jobs. I want to oversee every single project that we’re doing. I need to make sure that when someone walks into that house, that it’s perfect.”
The northwest Cape stands out from other areas in that independent home builders—and buyers who don’t want to be paying homeowner’s association fees—can thrive there.
“I see it as a diamond in the rough, really,” Toto says. “That’s why I invest all my eggs here. There’s so much Gulf access here. The amount of Gulf access here—we as a family love it.”
The Big Three, Plus One
Home builders Lennar, Pulte Homes and D.R. Horton—nicknamed “the Big Three”—continue to dominate in Southwest Florida. But they are running out of land on which to build in Lee County, other than off Corkscrew Road, where thousands of homes are already being planned and built. That means the strategy for the future shifts to Charlotte County, said Darin McMurray, the regional vice president for Lennar.
“You think about Charlotte County,” McMurray says. “And now Charlotte almost reminds me of Lee County many, many years ago, when we were just a regular town. Now, Lee County has boomed. Where else are you going to go? You’re going to go a little bit north. I think Charlotte County is going to be a great little county to be in. And it’s led by Babcock Ranch.”
At Babcock Ranch, a few more than 2,500 homes have been built of a planned 19,500.
“It’s like a little city,” he says.
But there’s another development in play, and it’s near Charlotte County’s economic center.
Murdock Village, off U.S. 41, has the West Port development. It’s about 2,400 planned homes on 452 acres with a planned 200,000 square feet of adjacent commercial development.
“It’s really the heart of Charlotte County,” McMurray says. “It’s really a center hub. Babcock Ranch is doing great. You think about Corkscrew Road—Cameratta Properties has done a great job. And now you have to think about what’s coming up with Kingston (east of Estero). Corkscrew Road is a great growth area.
“And then you look at Daniels Parkway. We’ve got Timber Creek. We’ve got that community coming up, as well.”
While the Big Three tend to build homes as part of large-scale developments, Christopher Alan Homes has found a niche in those but also in smaller projects.
Spun off in 2017 from a company that used to do contract work for Lennar, Pulte Homes and D.R. Horton, Christopher Alan Homes has ascended to fourth place for building homes in the region and 108th across the country. It builds about 500 homes a year and has found a foothold in those same two growing Charlotte County communities, said CEO Ian Schmoyer.
“The big guys are constrained,” Schmoyer says. “Everybody’s after land right now, especially the nationals. We’re a small company. So, we’re heavy into spot lots or gathered lots, which in Southwest Florida are readily available. It still seems like everybody is moving here. So, I don’t think you’ll see much in terms of a price decrease.”
Fewer homebuyers are taking upgrades these days, Schmoyer said, as they are looking to cut costs.
“Generally, what we’re seeing in that 1,500- to 1,800-square-foot range, it’s still selling very well with less spec options,” Schmoyer says. “More of a standardized home. They want fewer options. They may not be upgrading to level four granite throughout the house, because they want affordability. That’s one thing we’ve struggled with, is affordability.”
Because of that affordability factor, Cape Coral and Lehigh Acres home building would continue to surge, he said.
“Affordability,” by the way, has been redefined these days to about $290,000, a price that remains out of reach for many.
“Cape Coral is very strong,” Schmoyer says. “I think Lehigh is still a strong market. And then anywhere along the Corkscrew corridor. Spot lot builders and the nationals are investing heavily into Lehigh, because it is a more attainable price point. You’re seeing a lot of people from the East Coast purchasing in Lehigh.”
Another thing influencing affordability, or lack thereof, has been a labor shortage.
“Finding labor has been hard lately,” Schmoyer says. “The supply chains were starting to fix themselves after COVID. Then we got hit by the hurricane, which did not help. It’s affected a lot of contractors through our trade partners.”
New Law Drives Labor Shortage
The new Florida law, Senate Bill 1718, limits social services for undocumented immigrants and invalidates driver’s licenses issued to them in other states. It also requires hospitals receiving Medicaid dollars to ask for a patient’s immigration status.
Even before the law’s enforcement, which began July 1, the chain reaction of undocumented workers leaving Florida had started, said Luis Gomez, co-owner and general manager of Caloosa Cooling, an air conditioning repair business.
“Now, it has been becoming increasingly difficult,” Gomez says. “It has become very, very difficult to find employees. We have seen a massive migration of employees out of the state. I don’t know if it’s because of their family situations or what.”
Caloosa Cooling did not lose many employees, he said, but attracting new ones has been a challenge.
“We were very fortunate that we didn’t lose many employees, because we tried to do things the right way,” Gomez says. “That being said, I can tell you the amount of employees coming to interview is less. It’s affecting other industries and putting pressure on other businesses. The type of employees that we need access to has to be more technical. They’re a tradesman that have to have had formal training. There are offers out there for more money. That makes it tougher for us to keep up with those.”
Raising wages sometimes means having to raise prices, and Caloosa Cooling did not want to have to do the latter, Gomez said.
“It’s tougher to stay competitive,” Gomez says. “That’s where the challenge lies for us. There’s no crystal ball here.”
Industrial Surges but Shifts
Seagate Development Group, headquartered off the east side of Interstate 75 just north of Alico Road, has about 50 active construction projects, ranging from multimillion-dollar mansions in Collier County and Boca Grande to an industrial park complex not far from its own headquarters.
Matt Price, CEO of Seagate, said the rising interest rates and construction costs and labor shortages haven’t stopped Seagate from proceeding, but it has caused the company to be even more careful with vetting its clients.
“We used to do a lot of design-build leases for people,” Price says. “But with what we’re seeing, and because of the interest rates, the developer has to make money. A lot of the deals we’re doing now are for owner-users. They’re putting their own money into it.
“We’re able to work with a lot of clients like that and make it work for them. We have a lot of banking relationships. We’re a one-stop shop, and we’re problem solvers. If somebody needs to do something, we can figure it out for them.”
Construction costs aren’t the only thing rising, either, he said.
“Fill, you need for the piece of ground,” Price says of filling in the land prior to construction to prevent flooding. “That number is a big number now. It used to cost $20 for a buildable square foot. That number is getting closer to $40 now, just for ground and infrastructure. That’s a big number when you start extrapolating.”
Spec is short for speculation, meaning constructing a building with the hope someone will lease or buy it later. Seagate has focused on getting its deals done prior to construction, rather than building on spec.
At Alico Trade Center, Seagate is building about 200,000 square feet of industrial space. There will be six new buildings for six clients: California Closets, Beacon Roofing Supply, Trend Moving & Storage, Gulf Coast Aluminum, Velocity Engineering Services and Ten-8 Fire and Safety.
“It’s little things that you run into in the process,” Price says of his company’s projects. “Our biggest thing lately has been permitting—permitting has been an issue. We can only do our best. You don’t want to cry wolf too many times on projects, because everybody wants their projects to move forward. There’s certainly a frustration that things are not happening as quickly as they used to in the construction business.”
In Lee County, the government voted Aug. 1 to add 23 new jobs in its community development department to help deal with permitting volumes.
From Oct. 1 last year until June 30, the Lee County staff accepted more than 70,000 permit applications, and more than 45,000 of them were hurricane-related.
Medical Row Off Metro Parkway
With Southwest Florida continuing to grow, so does the need for an increase in medical care.
That expansion in health care has been happening near the region’s center.
Stevens Construction, which has built hospitals and other medical facilities throughout Florida, believed so much in Hope Preserve’s concept as a medical and Class A office complex that it began buying and building there—not just for clients, but for its own corporate headquarters.
“This location is perfect because of its proximity to Gulf Coast Hospital, which continues to expand,” said President Mark Stevens, who founded Stevens Construction in 2003. “The land here has become much more centrally located than it was 10 to 15 years ago. It’s close proximity to I-75, and we’ve got access south (on Michael G. Rippe Parkway), we’ve got access north, we’ve got access east and west. Then, to have a clean slate of land at Hope Preserve—it’s attractive because it’s all new. You’re not confined by any other neighboring parcels or other constraints. You don’t have to buy a building and renovate it.”
So far, Hope Preserve comprises 46.5 acres. Stevens Construction has built almost 128,000 square feet of medical and office space on it, including its own 20,000-square-foot headquarters, with 7,000 square feet being leased to Raymond James.
Just next door to the south is the 28,000-square-foot Radiology Regional Building and the 60,000-square-foot Orthopedic Specialists of Southwest Florida headquarters. There’s also the 20,000-square-foot Paramount Surgery Center.
On Aug. 18, Stevens Construction paid $3 million for the remaining 7.75 acres, which is planned for 85,000 to 100,000 square feet of medical uses and other office space. Stevens Construction also paid $2.2 million for the 5.82 acres just across Metro Parkway, which is planned to be a future hotel and more medical uses. LSI Companies brokered both of those deals.
With rising interest rates and costs, Stevens said he wasn’t in a hurry to start building there yet.
“I think there’s going to be as much demand for professional space as for medical,” Stevens says. “I have a lot of faith in this area. Moving here put us in a better position to take on other projects, as opposed to being over at our older location at Whiskey Creek.”
Hurricane Ian also presented Stevens Construction with five additional projects, including the remodeling of the Green Flash restaurant on Captiva, the reconstruction of The Island Cow restaurant on Sanibel and the rebuilding of a Sanibel resort.
“Even if you take the hurricane out of it, it’s still a booming area,” Stevens says.
Tourism and Hospitality Projects Accelerate
The 785-room Sunseeker Resort Charlotte Harbor in Port Charlotte and the 254-room Margaritaville Beach Resort project on Fort Myers Beach have been planned, and delayed, for years.
Now, they are poised to lead a post-pandemic and post-Hurricane Ian revival of tourism in the area—and likely will spark construction of new resorts to follow, especially on Fort Myers Beach, said Tom Torgerson, co-CEO of TPI Hospitality, which owns Margaritaville Beach Resort Fort Myers. It is expected to open by January 2024.
“It was extremely challenging,” Torgerson says of planning and getting to groundbreaking—and then resuming after the storm. As of Sept. 28, 2022, construction was about 85% finished.
“Because we weren’t watertight, it didn’t help us in a lot of ways,” Torgerson said of the storm surge. The exterior walls, however, held up just fine.
“We had a setback with the loss of some materials and dealing with supply-chain issues. We still are working hard. Insurance is probably going to cover about 85% of our losses. We probably have to cover about 15%.”
He said seeing the project through to its almost completed state has been gratifying—and, he also hopes, inspiring.
“And also, a great opportunity for those with the wherewithal to follow through,” Torgerson said. “Fort Myers Beach is going to go through its renaissance. I never thought I’d see it in my lifetime. Now I know I will.
“Fort Myers Beach will be developed as a district instead of each new development having to stand on its own. Way different from the Sunseeker Resort. Fort Myers Beach is going to be a community-wide district of entertainment and action and beach. Real beach. There’s nothing else in Southwest Florida like this. I don’t know if I’d call it a Key West or what, but it’s going to be its own unique district.”
He acknowledged, “The demographics are going to change. It’s going to have to. The price of real estate is going to change. There’s nothing you can do to stop that. It’s going to be wealthier. But high-energy. Filled with people who love to live life. Fort Myers Beach will be unique in and of itself.”
In Collier County, a few hotels are under construction, and more are in the permitting pipeline. The Ritz-Carlton, Naples relaunched with major renovations in July after the beachside resort was shuttered for more than eight months because of storm surge damage from Hurricane Ian. Resort additions include new restaurants, a new lobby and an additional tower of suites.
The hurricane caused construction delays for another waterfront resort: The Four Seasons hotel being built as part of the redevelopment of the historic Naples Beach Hotel & Golf Club. The Athens Group and MSD Partners acquired the nearly 125-acre Naples Beach Club property on the Gulf to build 185 luxury residences with upscale club amenities, in addition to a 216-room hotel and resort that will be managed by Four Seasons.
Construction is progressing on AC Hotel Naples 5th Avenue, a new three-story hotel by Marriott that is targeted to open in December on the Naples Square property across from Bayfront at Goodlette-Frank Road and U.S. 41 East. The 150-room hotel will include the Limón Rooftop Bar, a ground-floor cafe and lobby, a rooftop swimming pool and 2,500 square feet of meeting space. The hotel is a short walk from the new Gulfshore Playhouse, itself under construction.
Also under construction is The Perry Hotel Naples, a seven-story hotel targeted to open in 2024 next to The Bay House restaurant in North Naples. The developer is FOD Capital, headquartered in Key West, where the family office investment fund has another hotel and marina. The new 160-room hotel will have a seventh-floor open-air rooftop bar and 75-seat restaurant, said Lee Rekas, FOD’s vice president of sales and marketing. “The hotel will face the Cocohatchee River with direct channel access to the Gulf of Mexico and Wiggins State Park, and a riverwalk through its nature conservation area to a waterfront pier and eight-slip marina for watersports and excursions,” she says.
Construction also began this summer to convert an existing hotel on U.S. 41 in North Naples into a Compass Hotel by Margaritaville, which is targeted to open before the end of the year.
The Compass Hotel Naples is replacing the Staybridge Suites Naples, says Kelly Basham, regional director at TPI Hospitality, the Minnesota-based developer and hotel management company that also is behind the Margaritaville Resort under construction on Fort Myers Beach. “There will be no structural changes to the existing hotel, however many cosmetic changes bringing on a new, fresh feel to the area,” Basham says.
Intended to have a boutique hotel look and feel, the Park Shore location will be the first all-suite hotel in the Compass portfolio and feature 120 fully equipped suites in a tropical setting inspired by Jimmy Buffett’s classic, “Margaritaville.”
Many more luxury condominiums and apartment complexes are rising from the ground in the Naples area.
Since breaking ground last fall, Ascent at Metropolitan Naples residences are taking shape at Davis Boulevard and U.S. 41 East in East Naples. The first occupants are expected to be able to move in next fall. When Metropolitan Naples is completed, the joint venture will include restaurant and retail space with six stories of garage parking below 270 residential units, which will have some 2,133-square-foot penthouses. Amenities will include concierge services, an infinity pool and sundeck, a two-story fitness center and a pet spa. While just outside the Naples city limits, the Collier County project visually extends the city and serves as a catalyst expected to spur further growth in the Bayshore Gateway Triangle community redevelopment area.
Heading east on U.S. 41 in that same CRA district, Marea Apartments started moving in its first tenants in March, and its fifth and final building is expected to be completed by the end of October. Marea has 300 units with one, two and three bedrooms in four-story buildings and freestanding garages near the intersection of Airport-Pulling Road and the East Trail. Its amenities include a clubhouse with a fitness center, a resort-style saltwater swimming pool, a gourmet demonstration kitchen, a pickleball court, a dog park and electric vehicle charging stations.
More luxury condominiums are under construction at The Ritz-Carlton Residences, Naples on the northeast corner of Vanderbilt Beach Road and Gulf Shore Drive in North Naples. The rebranded One Naples redevelopment project is on 6 acres across Gulf Shore from Vanderbilt Beach and across Vanderbilt Beach Road from The Ritz-Carlton, Naples beachfront resort. The new condo complex will have 128 luxury residences among a pair of 12-story buildings known as the Tower Residences, two mid-rise buildings called the Bay Residences and a fifth mid-rise building called the Park Residences with an adjacent 22-slip marina.
Numerous other luxury condominium and apartment projects are in varying stages of construction throughout Naples and Collier County.
New retail centers are rapidly being built to provide more amenities to serve Collier County residents living east of Collier Boulevard. Naples-based Barron Collier Companies, or BCC, is behind the development of three of those commercial projects.
The Plaza at Founders Square is nearing completion as the last multiunit commercial piece in the center of Founders Square, a mixed-use development on the southeastern corner of Immokalee Road and Collier Boulevard. BCC partnered with Trinity Commercial Group and Metro Commercial to develop more than 50 acres that had hosted a wholesale plant nursery for decades.
Sunshine Ace Hardware launched there this spring as the anchor and first business in a strip that will also be home to the first area location of Oar & Iron Raw Bar & Grill, a new upscale concept from a Boston-based restaurant group. In between these two endcaps will be a Cuban restaurant, a dental office and health-related businesses, such as Hand & Stone massage and facial spa, Restore Hyper Wellness and Spenga workout studio.
BCC also recently went vertical on Collier County’s easternmost retail center, which broke ground this spring on Ave Maria Boulevard in the fast-growing, master-planned community of Ave Maria.
The 22,482-square-foot retail center, also to be anchored by a location of Sunshine Ace Hardware, will feature an NCH immediate care center, a Dunkin’ drive-thru, a Cold Stone Creamery ice cream shop, a pizzeria and other small businesses.
“Retail follows rooftops. We kind of hit this critical mass level where now commercial is underserved. And we have a list of people trying to open businesses, and now it’s just us trying to keep up with the demand,” says Cee Cee Marinelli, vice president of commercial real estate for the Barron Collier Companies.
An additional development, Arthrex Commerce Park, is underway off Oil Well Road near the Arthrex Manufacturing Inc. plant in Ave Maria, Marinelli said.
“It’s about 150 acres of undeveloped land. And there we have plans for a 300-unit apartment complex that we will be joint venturing on. We’ve sold 15 acres for an assisted and independent living facility. There’ll be a substantial medical campus, as well as additional industrial and retail outparcels that we’re working right now to currently design and permit the infrastructure. So, probably within 18 months, we’ll start seeing some construction down there, as well,” she says.
BCC also has a hand in developing a new commercial project near the so-called Randall Curve area on the western edge of Immokalee Road just north of Randall Boulevard in Golden Gate Estates. A new McDonald’s drive-thru restaurant, NCH medical offices and a self-storage building are under construction just north of The Randall at Orangetree, a mixed-use development that will include 400 apartment units, an Aldi grocery store, another retail strip and outparcels, such as 7-Eleven and Brickyard Car Wash.
Another retail development on the north side of Oil Well Road will break ground soon on former citrus grove acreage fronting the Orange Blossom Ranch residential development immediately east of Palmetto Ridge High School. Shoppes at Orange Blossom will include a new Publix supermarket, another 400-unit apartment complex, medical offices and several other restaurant and retail opportunities on nearly 40 acres.
Gulfshore Business Senior Editor Tim Aten contributed to this report.